Blockchain continues to gain attention across multiple industries -- and it's possible that 2018 will be the year that many types of organizations move forward with serious initiatives. That includes oil and gas companies, which could be well suited to the emerging technology.
Broadly defined, blockchain is a means of maintaining a ledger of transactions across a network over time; it's a continuously growing list of records (blocks) that are linked and secured using cryptography.
At the moment, there remains a mix of hype and reality when it comes to blockchain. But that doesn't mean companies should be skeptical about it or sit on the sidelines while others adopt blockchain strategies.
As research firm Gartner Inc., pointed out in a July 2017 report, "blockchain technologies are extremely hyped, evolving at different trajectories, but should not be ignored. They offer the potential for substantial change in technology development and delivery as well as in how the economy, business and society operates."
For a sense of how blockchain is growing in importance, consider that demand for professionals who specialize in blockchain and bitcoin-related work jumped in the third quarter of 2017, according to data from Upwork, a website that links freelance workers with prospective employers. The two areas were ranked the second and third fastest-growing skills for the quarter, respectively, on Upwork's platform.
Blockchain can play a useful role in a number of industries, including oil and gas.
"Blockchain technology can be deployed across the entire oil and gas supply chain, from the wellhead all the way to the consumer," said Daniel Nossa, an attorney with the law firm Steptoe and Johnson, who has closely followed the development of blockchain technology.
"When combined with IoT [Internet of Things], the technology can be used to securely track and monitor the extraction and transportation of hydrocarbons," Nossa said. "Smart contracts embedded in the blockchain platform together with emerging AI [artificial intelligence] technology can automate many of the transactions that occur, such as the sale and physical transfer of the commodity from producers to marketers to refiners and on to consumers."
Blockchain in the industry is still quite early in the development phase, Nossa said. "Whereas the financial sector is probably in the first inning of blockchain development and deployment, the crowd is just entering the ballpark in the energy space," he said. Some of the largest energy companies with research and development budgets are experimenting on highly specific use cases, he explained.
Among the potential benefits of blockchain for these companies and ultimately their customers are security, transparency, efficiency, and speed, Nossa said.
There are risks involved with blockchain, however, and energy companies will need to address them.
"One important risk right now is related to early adoption," Nossa said. "Energy, along with most other industries, will be learning a lot about the benefits and limitations of blockchain technology through trial and error. This will be a time consuming process. If energy companies follow the example of Wall Street by forming consortia, they can share costs and lessons from their blockchain initiatives and thus expedite the development and implementation of the technology."